{"id":199611,"date":"2025-03-12T07:29:32","date_gmt":"2025-03-12T07:29:32","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=199611"},"modified":"2025-03-12T07:29:34","modified_gmt":"2025-03-12T07:29:34","slug":"under-a-perpetual-inventory-system","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/12\/under-a-perpetual-inventory-system\/","title":{"rendered":"Under a perpetual inventory system"},"content":{"rendered":"\n

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the<\/p>\n\n\n\n

a.Inventory account.<\/p>\n\n\n\n

b.Purchases account.<\/p>\n\n\n\n

c.Supplies account.<\/p>\n\n\n\n

d.Cost of Goods Sold account.<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

Correct Answer: A. Inventory account.<\/strong><\/h3>\n\n\n\n

Under a perpetual inventory system<\/strong>, the acquisition of merchandise for resale is debited to the Inventory account<\/strong>. This system continuously updates inventory records in real-time for each purchase or sale transaction.<\/p>\n\n\n\n

Explanation:<\/strong><\/h3>\n\n\n\n

The perpetual inventory system maintains an ongoing record of inventory balances. When a company purchases merchandise for resale, the cost of the inventory is debited<\/strong> to the Inventory account<\/strong> rather than using a separate Purchases account. This method ensures that inventory levels and costs are always up to date.<\/p>\n\n\n\n

Why the Inventory Account is Used:<\/strong><\/h4>\n\n\n\n
    \n
  1. Continuous Tracking<\/strong>
    The perpetual system continuously updates inventory records, reflecting real-time changes whenever merchandise is bought or sold. This eliminates the need for periodic physical counts to determine the cost of goods available.<\/li>\n\n\n\n
  2. Accurate Financial Reporting<\/strong>
    Since inventory is updated in real-time, financial statements accurately reflect inventory values and cost of goods sold (COGS) at any given moment. This improves decision-making for management.<\/li>\n\n\n\n
  3. Automation and Efficiency<\/strong>
    Modern accounting and inventory management systems automate inventory tracking, reducing manual errors and providing instant reports on stock levels.<\/li>\n<\/ol>\n\n\n\n

    Why Other Options Are Incorrect:<\/strong><\/h4>\n\n\n\n
      \n
    • B. Purchases Account<\/strong>
      This is used in the periodic inventory system<\/strong>, not the perpetual system. Under periodic inventory, purchases are recorded separately, and inventory is updated at the end of an accounting period.<\/li>\n\n\n\n
    • C. Supplies Account<\/strong>
      Supplies account records office or operational supplies, not merchandise inventory.<\/li>\n\n\n\n
    • D. Cost of Goods Sold Account<\/strong>
      The COGS account<\/strong> is debited only when inventory is sold<\/strong>, not when it is acquired.<\/li>\n<\/ul>\n\n\n\n

      Thus, under a perpetual inventory system, merchandise acquisition is properly recorded by debiting the Inventory account<\/strong> to maintain accurate and real-time inventory tracking.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Under a perpetual inventory system, acquisition of merchandise for resale is debited to the a.Inventory account. b.Purchases account. c.Supplies account. d.Cost of Goods Sold account. The correct answer and explanation is : Correct Answer: A. Inventory account. Under a perpetual inventory system, the acquisition of merchandise for resale is debited to the Inventory account. This […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-199611","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=199611"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199611\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=199611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=199611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=199611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}